P2P-Banking.com

Prosper.com announced yesterday that the offers received for late loans to be sold off as defaults were to low to be acceotable. Doug Fuller, Vice President of Operations says, that with offers at 1.5 cents for the dollar, Prosper believes "the prudent course of business is NOT to sell them at this time". More on the Prosper blog post.

Today MyC4 presents itself in an all new shiny layout. On MyC4 lenders can give loans to small businesses in Africa. Unlike at Kiva, lenders at MyC4 earn interest. So far 1.8 million Euros (approx. 1.2 million US$) have been invested in loans and there are no defaults yet - only several late payments. With the new release …

… three key elements have been prioritized on the new website; usability, design and communication. We have made it easier to understand what MyC4 is all about, how to join, how to upload money, how to find a Business, which fits your criteria and lastly how you invest and re-invest.

According to MyC4 the changes in today's release are:

• The look of MyC4.com has been updated
• Improved navigation making it easier to find your way around via a top menu and a left hand menu with sub-levels
• “Opportunity” changed to “Business” – to access the overview of Businesses, click on “INVEST” in the top menu
• MyCredits is now changed to EURO (€)
• The Investor now carries the Currency Risk
• Withholding tax

I also noticed that MyC4 is no longer marked as "beta".
The handling of currency risk is a major change. The announcement email says:

At MyC4 we want to offer a sustainable and easy to understand solution for the African Businesses. The currency Risk has until now been carried by the African Business, but this has uncertainty for their loan conditions.

To ensure that MyC4 and the African Businesses are sustainable in the long run a new model for the Currency Risk has been developed. We now transfer the Currency Risk to the Investor, which has to be covered by the size of the interest rate you demand.

As a consequence please be aware that going forward there is a Currency Risk on your new investment when investing in some African countries. MyC4 cannot advise on the daily currency development, but based on the last 3 years currency fluctuation we suggest as a guideline that your add the following percentages to your normal wanted interest rate to cover for the potential Currency Risk;

Uganda 6%
Kenya 2%
Côte d’Ivoire 0%

This means that if you where planning to Bid on a Business in Kenya with an interest of 8% in mind you now add the 2% - so you Bid 10%, but will properly get 8% depending on the currency fluctuation over the period of the loan.

 Screenshot of MyC4 in new design
 

Demand at Boober.nl is slowing. When I checked today only two loan listings were open. The following curve showing unique loan requests definitly shapes in the wrong direction. Boober lenders discus this development in this forum thread.

(Source Booberwatch.nl)

Since the launch 15 months ago, about 2.4 million Euro (about 3.8M US$) loan volume has been funded through Boober.

German Smava.de has funded about the same volume (2.3 million Euro) but after a slower start 14 months ago, lately the volume growth accelerated moderately.

(Smava loan volume, Source: Smava loan stats at Wiseclerk.com).

On Smava as well as on Boober average borrower interest rates have risen considerably since the start. This reduces the attractiveness for borrowers.

A new research report on peer to peer lending was published at VRL KnowledgeBank. The 200 pages PDF-report (table of contents), written by Ray Cain, can be purchased online. It covers the following issues:

• What is P2P lending? Who are the main players?
• What is their operating model and crucially their profitability projections?
• What are the practical issues involved in building a large virtual community of lenders and borrowers, such as compliance, identity verification, credit screening, IT infrastructure, customer service and marketing? Can borrowers and lenders really be peers?
• What short term lessons can financial services providers draw from P2P?
• The future for P2P lending… is it an opportunity or a threat for the lending industry? How to blend P2P with other financial services? Can it be rolled out across the full range of mass market retail financial services?

Credit card issuer Advanta entered into a partnership with Kiva. The initiative is called KivaB4BProject and Advanta will match the loans made by business card holders with up to 200 US$ per card. Card holders simply select a business owner to sponsor through Kiva and make a grant using their Advanta Business Card. Advanta matches that grant, dollar for dollar, and Kiva distributes the total resulting funds.

The loans funded by this project can be seen on this Kiva lender page. Already contributed to more than 500 loans.

When the project was announced at Advanta's headquarters, Advanta flew in Kiva borrower Senerita Lilli a dressmaker from Samoa to share her story. 

Prosper will run television ads (preview them online). The TV spots will be aired in test markets starting this week.

MyC4 has just published a quarterly magazine to accompany it's website. The first issue of Change has 20 pages, looks stylish and has lots of information (e.g. Senegal will be the next market, where loans are available to borrowers starting in June). Here is what MyC4 says about it's magazine:

We have just released the very first issue of CHANGE - the magazine that comes all way around MyC4: Vision, business model, partners, supporters, etc.

Zopa plans to launch a student loan feature in July. Students can already use peer-to-peer lending sites to apply for a personal loan. At Prosper.com, education loans account for less then 2% of its 135 million US$ in loans. (Sources: Smartmoney,  WSJ)